Is Health Care Reform Working?

Health care reform in Canada in the wake of the Romanow Royal Commission and the 2004 Health Accordhas often been described as a story of missed opportunity with the increases in federal transfer spending not accompanied by desired results.As the review of the 2004 Health Accord by the Standing Senate Committee on Social Affairs, Science and Technology concluded in 2012, the achievements of the accord were mixed.The increased funding “had increased the provision of services, but had not resulted in reform of health-care systems, including the much-needed integration of different health-care sectors and the breaking down of silos.”In other words, it has been pretty much business as usual.Yet, there is some interesting evidence in a recent paper by Arthur Sweetman and Gioia Buckley (both at McMaster University) that in the area of primary care reform, Ontario has been implementing some major reforms.

In an April Calgary School of Public Policy Research Paper titled Ontario’s Experiment with Primary Care Reform, Sweetman (also the Ontario Research Chair in Health Human Resources) and Buckley note that Ontario has actually made significant changes to its physician compensation method over the last decade.Whereas in 2000, roughly 95 percent of general/family practitioners were paid traditional fee for service, by 2013 that proportion had dropped to just 28 percent.The province has managed to replace physician fee for service with group oriented blended payment models such as:

1) capitation (in some cases): a single payment for providing a particular “basket” of services to a patient for a fixed period, for example a year, regardless of the number of services provided,

2) fee-for-service payment, for services outside the capitated basket and provided in special situations, and

3) various bonuses and incentives (sometimes called pay-for-performance) that mostly focus on preventive care and the management of chronic conditions, and

4) Salary models particularly in some northern and rural areas.

Ontario has seen the spread of an alphabet soup of new payment models such as FHNs (Family Health Networks), FHGs (Family Health Groups), CCMs (Comprehensive Care Management) and FHOs (Family Health Organizations) each with various combinations of a blend of either capitation or fee for service with rosters of patients and penalties for physicians whose patients go outside the roster.As well, there remains traditional fee for service or FFS. You need to read the paper to get the differences across these approaches.

So, has this health reform generated improved access to physician services, improved patient outcomes, and lead to a more cost-effective public health care system?Well, here the report notes the following:

“… the same challenges that make reform a formidable undertaking also make it difficult to readily, or quickly, measure success, especially since many changes are ongoing. It is not yet demonstrably clear to what degree the government’s goals are being achieved. At present, there are mixed and conflicting findings about whether some of these changes have moved the health system towards the intended goals of improving health-care access and quality, and patient satisfaction, let alone whether the potential improvements can justify the resources expended to achieve them.”

In other words, it is still too early to tell.The authors argue that many of the benefits of these reforms may lie in the future.I am not so sure.There certainly has been a lot of investment in primary care reform in Ontario significant spending on new institutional arrangements given the proliferation of new alternative payment systems.While average payments to primary care physicians paid by FFS seemed to have remained stable, average payments by salary/capitation methods have gone up.This might suggest that in the short term at least, spending has continued to rise with physicians merely switching out of one system and into another.There are certainly more physicians than there used to be which potentially could result in greater access and services but again there has been some evidence that individually physicians are seeing fewer patients.

My most important piece of evidence is simple.If you look at real per capita public spending on physicians in Ontario over the long-term using CIHI data, it has gone up dramatically since 2002 (See Figure 1).That is not the most ringing endorsement for the new alternative payment systems.However, growth does appear to have moderated since 2010.That may due to fiscal pressure on government finances as a result of the recession or it may be the long-term result of these reforms finally kicking in.However, if there are long-term benefits from these reforms at least on the cost-control side, let us hope they arrive soon.

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Misallocation. One of the biggest sources of waste with FFS are highly trained doctors doing easy low skill procedures, or stretching visits out over time etc. Capitation helps de emphasize discrete services but doesn't help reallocate doctors time. We need to reform the payment system in such a way that doctors have an incentive to reduce costs. For example, give nurses more of a role, and dramatically decreased what doctors can collect from handing out sick notes and the like. Make all the high return stuff belong to high value activities. It will then be easier to cap the budget at a lower level.

Livio, it's intriguing that per cap spending on physicians has gone up, even as we are now at a record level of physician supply in the country (and apparently nursing supply as well). My own conjecture is that this speaks to the supply-sensitive nature of healthcare rather than any increase in population morbidity. I think this is also partly explained by the ongoing drift away from the lower-paid specialties like family medicine and geriatrics.